Nikola Jankovic, SIEPA: Serbian economy has experienced growth due to strong foreign investment and continuous improvement of its business environment
Acting Director of Serbia Investment and Export Promotion Agency (SIEPA)
What trends have you seen in FDI into Serbia in recent years?
Serbia has become a part of global economy and in that sense it also experiences global economic trends that are occurring outside of its borders. Even before the global economic crisis, a down flow of FDI in the region (Southeastern Europe) has been noticed, which was further amplified by the global recession. There are virtually no capital investment projects in the region, but a wave of medium and small scale investments that are both production and export oriented.
According to Ernst and Young European Attractiveness Survey 2014 Serbia was one of Europe’s favorite investment locations in CEE in 2012. The success continued in 2013 - number of new jobs was up by 18%, placing Serbia on the 5th position in Europe, while 63 new projects made Serbia the second most attractive location in CEE, second only to Poland.
Which sectors have been the largest recipients of FDI?
By far the most intensive sector is automotive industry, propelled by the capital investment by FIAT in the city of Kragujevac, central Serbia. Today, we have more than 150 companies from the automotive sector, generating the country’s GDP by large as well as export from Serbia.
Due to an excellent agricultural land, food and beverage procesing sector is second by a number of projects. Serbia participates with over 30% of world’s raspberries production, and has an excellent position to cover both SEE, as well as the Russian market.
Also, textile is one of Serbia’s top exporting sectors, where FDI projects generated more than 10,000 new jobs. We have an abundant supply of experienced labor for this sector, with competitive average salaries, and plenty of available Brownfield locations.
Last but not the least, electronics is a strategic sector for Serbia. We have a long tradition stepped up by Siemens, Eaton, Panasonic, Gorenje, and others, accompanied by strong university centers in Belgrade, Nis and Novi Sad.
Which countries are the top sources of FDI?
If we look at the number of individual investments, top 10 foreign investors by country are coming from: Italy, Germany, Austria, Slovenia, France, USA, Greece, Israel, Croatia and Switzerland. On the other hand, if we look at the total investment value by country, the list is somewhat different: Italy, Austria, Greece, Norway, USA, Germany, Russia, Slovenia, Belgium and France.
What are the reasons behind these trends?
Serbia has traditionally been focused on the EU market and the biggest number of investments comes from the EU countries. There is a decades-long commercial cooperation with a large number of foreign companies stemming from Western Europe, which consequently evolves into the natural outcome that those companies open their production facilities here in Serbia. Moreover, Serbian labor force is very technically skilled and informed about the latest Western technologies, which facilitates the adoption of new technological processes and makes them efficient and effective.
What is SIEPA role in promoting investment into Serbia?
The Agency generates the initial interest and queries of potential foreign investors in Serbia, by promoting all government measures and policies related to this field. Furthermore, it actively assists the interested investors in selecting the best investment location and it also facilitates local administrative procedures.
The Agency’s scope of work does not simply end once the foundations of a news factory are laid or even with the opening of the new factory. The Agency continues with the aftercare of all investment projects and helps resolve any potential challenge that may arise in their line of business in Serbia.
To sum it up, my team has all the skills and expertise to guide investors from A to Z, helping them to avoid potential pitfalls along the way, and all our services are offered free of charge.
Which countries would you say are Serbia’s main competitors (i.e. alternative destinations for investment) and what are Serbia’s key advantages as an investment destination?
Traditionally, we have been comparing ourselves with countries of similar industry size and structure, such as Bulgaria, the Czech Republic and Slovakia. Lately, we are noticing intensive activities in the domain of attracting FDI in Macedonia. Unlike other countries from Southeast Europe, which were a part of the Warsaw Agreement, Serbia has an extensive tradition in cooperating with Western companies. Italian FIAT, for instance, has been present in Serbia through technical cooperation since 1956.
Siemens and some other companies have been here even before WWII. Such experiences equipped the Serbian labor force with the skills that our competitors from the region simply did not have. Moreover, there is a high level of English speaking people, which is not the case for the countries in the region. Finally, we are the only country outside of the Customs Union among Russia, Belarus and Kazakhstan that holds a Free Trade Agreement with Russia, which enables the products from Serbia to be directly exported to Russia, without any or with minimum customs.
What are your forecasts for future FDI?
The newly chosen Government demonstrated a firm focus toward reforms, through the set of system laws aiming at improving the country’s business climate. It is important to emphasize that the Government considered the investors’ recommendations in this domain. We are expecting that these measures positively reflect on the increase of investment activities, thus taking the country back to the level of minimum 1.5 billion euros of annual FDI in Serbia.
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